Double-digit transcatheter heart valve sales drive Edwards Q3

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Edwards Lifesciences, a developer of heart valves and hemodynamic monitoring, reported an increase in net income and sales for the third quarter, which ended Sept. 30.

According to the Irvine, Calif.-based company, Edwards' net income for the 2011 third quarter was $51.6 million, compared with a net income of $48 million for the same period in 2010.  Likewise, this year’s third quarter net sales increased 18.3 percent to $412.7 million compared with the same period last year.

"We are pleased to report very solid third quarter results, highlighted by increased demand for transcatheter heart valves and sustained strength in critical care," said Michael A. Mussallem, Edwards chairman and CEO. "On our fourth anniversary of commercial sales outside the U.S., it is gratifying to see our transcatheter heart valves … driving strong growth. And the FDA approval, which we expect any day, will allow Sapien to reach many inoperable patients in the U.S. suffering from severe aortic stenosis."

For the third quarter, the company reported heart valve therapy sales of $246.1 million, representing 22.7 percent growth over last year. Specifically, the transcatheter heart valve sales were $82.6 million, a 69.1 percent increase over 2010, primarily driven by strong procedure growth. Transapical sales, aided by the company's 29 mm Sapien XT, still comprise nearly half of total commercial transcatheter valve revenue.

"We still expect U.S. Sapien sales of $20 to $25 million in the first three months of launch and $150 to $250 million in the first full year," Mussallem said. “While we had modeled an early October FDA approval, our year-to-date performance outside the U.S. has been strong. Therefore, we continue to expect transcatheter valve sales for the full year 2011 of $330 to $360 million.”

Surgical heart valve sales were $163.5 million this quarter, a 7.7 percent increase over last year. “Overall, surgical valve procedures in the third quarter were once again moderated by slower economic conditions,” the company reported. “New competition in the company's core markets also affected the growth rate as previously discussed.”

The Critical Care unit sales were $126.7 million for the quarter, representing 14.2 percent growth over last year’s “share gains and broader product adoption in the U.S. and Asia were the strongest contributors to growth,” Edwards reported. “Advanced monitoring sales produced strong results, and share growth in legacy products was driven by global pressure monitoring.”

Cardiac Surgery Systems sales increased to $26.9 million for this year’s third quarter, representing sales growth of 13.2 percent over last year. Vascular sales were $13 million, representing a slight decline from the same quarter last year.

Selling, general and administrative expenses were $165.5 million for the quarter, or 40.1 percent of sales, compared with $133 million in the prior year. “This increase was driven primarily by U.S. transcatheter heart valve launch-related investments and the impact of foreign exchange,” the company said.

Research and development expenses for the quarter grew 17.1 percent to $61.7 million, or 15 percent of sales. This increase was primarily the result of additional investments in clinical studies and development efforts pertaining to the company's transcatheter heart valve programs.

At Sept. 30, Edwards said its cash and cash equivalents were $451.1 million and total debt was $175 million, resulting in net cash of $276.1 million.

However, the company lowered its earnings expectations for the year. "For 2011, given our strong year-to-date performance, we are tightening our previous range of full year sales to $1.68 to $1.72 billion, and we now expect to achieve net income growth of 7 to 10 percent, excluding special items.”